VOIDABLE CONTRACTS AND VOID AGREEMENT
A void agreement is one that is not enforceable by law, and it is considered as if it never existed in the first place. Examples of void agreements include agreements that are illegal or against public policy, such as agreements to commit a crime or agreements that are discriminatory in nature.
On the other hand, a voidable contract is a valid agreement that can be voided by one or more parties involved in the contract. A contract can be voidable due to various reasons such as fraud, coercion, undue influence, misrepresentation, mistake, or incapacity of one of the parties. If a contract is voidable, the aggrieved party has the option to either affirm or void the contract. If the aggrieved party chooses to affirm the contract, it becomes binding on both parties. If the aggrieved party chooses to void the contract, it is considered void ab initio, or from the beginning, as if the contract never existed.
It’s important to note that voidable contracts are different from void contracts, which are not enforceable from the outset, whereas voidable contracts are initially valid but can be voided if certain conditions are met. Voidable contracts and void agreements are two types of contracts that are recognized under Indian contract law.
A voidable contract is a contract that is valid at the time it is entered into but can be voided or cancelled by one or both parties due to a defect or flaw in the formation of the contract. For example, if one party was under duress or coercion at the time of signing the contract, the contract may be voidable at the option of that party. Similarly, if one party is a minor or of unsound mind, the contract may be voidable at the option of that party or their legal guardian. If a contract is voidable, the party who has the option to void it may either affirm or disaffirm the contract.
On the other hand, a void agreement is a contract that is not enforceable by law from the very beginning. Such contracts are said to be void ab initio or void from the outset. A void agreement lacks the essential elements of a valid contract, such as legal object, lawful consideration, and free consent of the parties. For example, an agreement to commit a crime, or an agreement to sell illegal goods or services, is void ab initio and cannot be enforced by law.
It is important to note that a voidable contract can be enforced by law until it is voided or cancelled by the party with the option to do so. In contrast, a void agreement is null and void from the very beginning and cannot be enforced by either party.
There are several circumstances under which a contract may be voidable, including:
- Misrepresentation: If one party to the contract has made a false statement of fact that induces the other party to enter into the contract, the contract may be voidable.
- Coercion: If one party has been forced or threatened into entering into the contract, the contract may be voidable.
- Undue influence: If one party has used their position of power or influence to unfairly persuade the other party to enter into the contract, the contract may be voidable.
- Fraud: If one party has intentionally deceived the other party in order to induce them to enter into the contract, the contract may be voidable.
- Mistake: If both parties have made a mistake about a fundamental aspect of the contract, such as the subject matter or the identity of one of the parties, the contract may be voidable.
If a contract is found to be voidable, the party who has the right to void the contract can choose to either continue with the contract or terminate it. If they choose to terminate the contract, they must do so within a reasonable amount of time after becoming aware of the circumstances that give rise to their right to void the contract.
In summary, a voidable contract is a contract that is initially valid but can be voided or cancelled due to a defect or flaw in its formation, while a void agreement is a contract that is not enforceable by law from the very beginning due to its fundamental flaws.
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